More Companies Adding In-House Medical Clinics

July 17, 2013 -- Next time you hear about corporate America being bled white by the high cost of employee healthcare, consider this: For every $1 that HanesBrands of Winston-Salem, N.C., spends on providing its employees an in-house clinic, it gets back $1.40 in savings.

It gets those savings, despite the fact that the clinic is free. They derive in part from improved productivity (fewer hours lost to workers' having to go off-site to see a nurse or doctor) and in part from the benefits that come from catching chronic conditions like heart disease and diabetes early.

Nor is Hanes' experience unique.

Stuart Clark, head of CHS Health Services, the contractor that runs Hanes's clinic plus more than 130 more for other big U.S. companies, tells ABC News that many companies with in-house clinics get even more payback: on average, a 3-to-1 return ($3 back for every $1 they spend on a clinic).

Start-up costs, says Clark, run anywhere from a few hundred thousand dollars to a couple of million, depending on its size. The figure covers such costs as staffing and getting the necessary licenses. After two years of a clinic's operation, he says, employers have recovered their one-time capital costs and are starting to see savings. By the end of their third year, he says, they see returns approaching 2-to-1 to 3-to-1.

Hanes V.P. Annmarie D'Souza, who created her company's clinic, says that since it opened in 2010 Hanes has seen a 30 percent drop in workers' emergency room visits and a 39 percent drop in inpatient hospital admissions.

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Clark says that the mission of in-house clinics has changed dramatically from the last century, when they were provided either because an employer's social conscience compelled it to offer medical care or because, in the case of industries like mining or timber, workers toiled far away from the nearest city's doctor. Today, he says, company clinics aren't needed so much to treat workplace injuries as they are to nudge employees to make lifestyle changes that promote good health and lessen the likelihood they'll get a chronic disease.

CHS-run clinics, says Clark, treat such acute conditions as a runny nose; but more importantly, they detect and address the onset of chronic conditions--hypertension, obesity, diabetes. Chronic illnesses, says risk management firm Aon Hewitt, now account for over 65 percent of corporate healthcare spending.

The clinic's and the employer's goal is to get a fat employee to eat less and exercise more; to get the smoker to stop smoking, and to have the nascent diabetic change their diet. Very often, Clark says, someone onsite at the workplace may have better success encouraging these lifestyle changes than someone off-site. "The idea," he says, "is that you have a provider who knows the culture, who maybe knows the employee. They're more likely to engage them in behavioral change. And that's the key to everything. You can't bring down costs otherwise."

At Hanes now, says D'Souza, 50 percent of employees with diabetes are "engaged"—meaning, she says, "that they have their glucose checked every so often, are following a diabetic diet, and interact with a nurse practitioner or wellness coach."

John Martin, an accounts-payable specialist at Hanes, told the Wall Street Journal he started visiting the clinic in January, having let his Type 2 diabetes go untreated for seven years. Clinic staff put him on medication and got him to lose 25 pounds through diet and exercise. "This has made me change the way I live my life," he told the Journal.

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Professional services company Towers Watson regularly surveys big employers (1,000 or more employees) to find out how they are spending their health care dollars. In 2011, 23 percent of companies surveyed said they had an onsite medical clinic; in 2012, 28 percent; in 2013 that rose to 32 percent. Some 39 percent say they will provide an onsite clinic in 2014.

Towers Watson consultant Shelly Wolff tells ABC News that companies with clinics cite reasons for having them besides cost-savings and reduced work loss. They can be "an attraction," she says: a reason an employee might want to go to work for the company. Similarly, a clinic can be part of an employer's strategy for improving employee retention.

A 2012 survey found that although nearly three quarters of senior management views clinics positively, their enthusiasm does not arise from a clinic's return on investment. Why not? Because more than half of the companies that have a clinic either don't track its ROI, or, if they do track it, senior management doesn't know what it is.

Why, then, are top managers such big believers?

"Sometimes," says Wolff, "it just comes down to a matter of philosophy. For some of them, it's just the right thing to do."